EU -Deforestation Regulation (EU-DR)

EU -Deforestation Regulation (EU-DR)

Subject :Environment

Section: International convention

Concept :

It is a European Union regulation that aims to counter deforestation by requiring companies registered in the EU that import or export specific items (list of 479 for India) have not been produced on land that was deforested after December 31, 2020. Items include: wood, palm oil, soy, coffee, cocoa, rubber, and leather.

There is criticism that this is just a form of non-tariff barrier to trade, as EU itself has reduced its primary forest cover to increase agricultural output before the said date, and now is not allowing other countries to do the same as they struggle with population pressure on resources.

India’s stand is that it violates Most Favored Nation (MFN) and National Treatment principles. This is the second such measure by the EU after its Cross Border Adjustment Mechanism. It is estimated that both together are likely to adversely affect exports from India to EU worth $9.5 billion.

As a measure to implement the regulation, the EU is likely to require exporters to use a block-chain enabled trace and track system, similar to the one used by Agricultural and Processed Food Products Export Development Authority (APEDA) for grape exports to the EU. This is most likely to impact smaller companies as it will add to compliance burden and operational costs.